The Right Tack Podcast, Episode 16 — Featuring Sam Major, LMFT, Owner of Apollo Counseling, Inc. and Fenris Inc.

Most practice owners assume the contractor vs. employee question is mostly a paperwork issue. Get the classification right, file the right forms, move on.

Sam Major has a different take. After seven years running Apollo Counseling in Minnesota, a behavioral health consulting practice called Fenris Inc., and facilitating the monthly ARMHS Network, he's watched this question trip up practice owners who thought they had it figured out.

In this episode of The Right Tack, hosts Paul and Jim Jonas sit down with Sam for a candid conversation about what it actually means to hire independent contractors in behavioral health, what the financial math really looks like, and where the legal exposure hides.

The Control Question Nobody Answers Honestly

Sam starts with what he calls the most misunderstood part of the whole conversation: it's not about taxes. It's about control.

"First and foremost, if you're really going to be looking at contractors, you need to know you can't tell them what to do. They are an equal. A W-2 is a subordinate you can direct."

He walks through an analogy he uses in every job interview. With a W-2 employee, you can tell them to wear a specific shirt, use a specific form, follow a specific script. With a contractor, you define the outcome and stop there. The burger has to be flipped. How they flip it is entirely up to them.

For behavioral health, that plays out in real decisions. You can't tell a contractor which clients to take. You can't mandate exactly how they document a session. You can explain what the law requires and why your tools make it easier, but you can't require they use them.

Sam chose the contractor model partly because he didn't want the dynamic that comes with being the boss. "I've been a W-2 employee. We've all had that boss. That confrontational environment where I'm saying, 'I don't care what you think, you need to do what I told you to do.' That feels really gross."

What the Financial Math Actually Looks Like

This is where the conversation challenges some common assumptions.

When a practice owner hires a W-2 employee at $20 an hour, the real cost is closer to $26. That extra $6 covers employer-side payroll taxes alone. It doesn't include benefits, health insurance administration, training costs, or the HR overhead required to manage all of it.

Sam's approach: take that $26 and hand it to the contractor. Let them handle their own taxes. "All that time spent figuring out which health plan to offer? That's back in your pocket."

The contractor side of that deal comes with its own requirements. Sam recommends that any contractor earning over $10,000 a year work with an accountant. The reason is straightforward: contractors can deduct home office space, equipment, CEUs, professional books, and other legitimate business expenses. A licensed therapist earning $80,000 a year could potentially reduce their taxable income to $55,000 or below with the right setup.

"There's a reason rich people have accountants. Accountants make you money."

He refers contractors to an accountant he trusts, and makes a point to walk through the basics with new hires so they understand what they're actually getting into.

Consistency Without Control

The obvious question: if you can't tell contractors how to run their sessions or write their notes, how do you maintain any clinical consistency?

Sam got this question from a judge during an unemployment hearing.

His answer: you earn compliance instead of demanding it.

"I am forced to actually make sense. I can't say, 'use this crappy spatula because it's what we have.' I have to explain why the better spatula actually works."

In practice, that means going to the statute. For ARMHS providers, Minnesota statute 245I specifies exactly what a progress note must contain: the intervention or objective from the treatment plan, the intervention used, and the client's response. The law doesn't define what counts as an adequate "client response," so Sam developed his own working framework — drawing on input from other clinicians — and shares it as guidance, not instruction.

"They have a choice. Follow my simple framework, or go read the statute themselves. Either way, you're getting paid above average. Most people are going to do the reasonable thing."

The result, Sam argues, is a staff that actually engages with documentation rather than just complying with it.

The Misclassification Risk You Can't Afford to Ignore

This is where the episode gets uncomfortable — and most useful.

Misclassification happens when a practice treats someone as a contractor but controls them like an employee. Minnesota uses a multi-factor test to determine the real nature of the relationship. The contract language doesn't matter. What matters is what actually happens day to day.

The key factors:

Control over method: Are you defining the outcome, or how they get there?
Client selection: Can you require them to take or drop a specific client?
Schedule and location: Can you mandate when and where they work?
Tools: Are you providing their equipment, or are they supplying their own?
Expense deductions: Can they write off business expenses?

One of the most common triggers is a word everyone in behavioral health uses constantly: supervision. Sam had to rename his "treatment supervision plan" to a "treatment consultation plan" after an unemployment hearing flagged it as evidence of a W-2 relationship.

"I had to explain to a judge — who had no concept of mental health — that supervision here doesn't mean I'm directing clinical work. It means the licensing board is requiring this, and I'm facilitating it. I didn't say this. The government said this."

If a contractor files for unemployment after leaving your practice, Minnesota defaults to assuming they were a W-2 employee. The burden of proof falls on you. That means clear contracts from day one, contemporaneous records, and a relationship that actually matched what the contract described.

Liability, Culture, and What You're Really Signing Up For

The conversation broadens in the second half. Paul raises liability, and Sam gives a direct answer: clinic insurance protects the clinic, not the practitioner.

"If they can save $10,000 by ruining your career, they'll ruin your career."

Sam requires that all his contractors carry their own professional liability insurance. He learned this the hard way. A contractor without coverage once cost him $15,000 to defend a claim for roughly $3,000 in services.

"Now I tell my staff: if you don't have professional insurance and you get into this problem, I am not defending you. They've been informed. That's the deal."

On the cultural side, Sam sees the contractor model as something that enables genuine diversity of staff — not just demographically, but in clinical style, personality, and worldview. Because contractors aren't subordinates, they don't have to hide who they are to keep their job. And because the relationship is outcome-based, people who aren't motivated simply don't make money and eventually leave. No performance management cycle required.

"I have people who see two clients. They're moonlighting. They've got a regular job nine to five and they like doing this on weekends. I make money, they make money, clients get served. Everyone's happy."

Jim pushes back gently on behalf of W-2 practices. Sam agrees the model isn't right for every practice or every clinician. Some people need structure, benefits, and the predictability of a traditional employment relationship. The goal isn't to convince everyone to switch — it's to make sure the choice is made deliberately.

Before You Decide

Sam's takeaways for practice owners:

Define outcomes, not methods. You can describe the burger. You can't specify the spatula.
Be transparent from day one. Contractors don't receive unemployment benefits, paid time off, or employer-side protections. People need to know that before they sign.
Document the relationship from the start. Contracts, onboarding conversations, and clear language about who controls what.
Get a lawyer and an accountant involved early. Not eventually.
If you're willing to grow, you have to be willing to shrink. Taking on contractors without systems to support them leads to the same management problems you were trying to avoid.

Listen to this episode of The Right Tack to hear the full conversation with Sam, including the story of how he got a Minnesota statute changed, the Norse mythology behind the name Fenris, and the unemployment hearing where a judge asked him point-blank why his contractors actually do what he asks.

The monthly ARMHS Network meets the first Thursday of every month at armhsnetwork.com.

Contractors or Employees? A Behavioral Health Practice Owner Makes the Case